Aero-engine maker Rolls-Royce (RR.) will go down as one of the greatest turnaround stories on record, with chief executive Tufan Erginbilgic injecting the sort of short, sharp, shock treatment the company needed.

Stephen Anness, manager of Invesco Global Equity Income Trust (IGET), first invested in Rolls back in 2020, since when the company has ‘gone through a remarkable transformation,’ he told Shares in December.

‘We always believed in the business’s exceptional engineering pedigree, with its strong, duopolistic position in wide body engines, but it had been mismanaged for a long period of time,’ Anness added.

Covid very nearly ended the company, and shortly after being appointed as chief executive in January 2023, Erginbilgic told the firm’s 42,000 employees they were standing atop ‘a burning platform’, but he also set out his aim to reverse the slide in profit margins and lay the groundwork for a new century of growth at the 120-year-old manufacturer. 

He's done that alright, and full year 2024 results on 27 February will show how far Rolls-Royce has come with underlying operating profit in the £2.1 billion to £2.3 billion range and free cash flow at levels not seen in years.

Rolls-Royce also expects to restart dividend payments again at a 30% payout ratio to underlying profits – the last time the firm paid a dividend was in January 2020, before the pandemic took hold.

Rolls-Royce shares were the best performers in the FTSE 100 in both 2023 and 2024, surging 207% and 96% respectively, and they have gained 9% so far this year.  

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